Several oil-exporting nations followed Saudi Arabia's lead and raised their oil prices yesterday by $1 or $2 a barrel, ending any hope the the Organization of Petroleum Exporting Countries might re-establish price unity.
Libya and Indonesia announced price-hikers of $2 a barrel, while Algeria, which already had the world's highest official selling price at $37.21, raised its price by $1. Mexico boosted the price of about half its oil by $1.50 a barrel last week after the Saudis raised theirs by $2.
More than half of the crude oil the United States imports now has risen in price in the last few days. About one-third of U.S. oil production no longer is under price controls, and the price of this domestic oil likely will go up, too.
Even if no countries increase their prices -- a doubtful proposition at this point -- American consumers will be paying about two cents a gallon more for gasoline and home heating oil prices if refiners pass on the higher crude oil costs.
Separately, Venezuela said it is increasing the price of high-sulphur residual fuel oil -- heavy oil burned by utilities and industry as boiler fuel -- by up to $1.20 a barrel. Earlier this year Venezuela had to cut the price of the fuel oil because of a sharp drop in demand.
Nigeria, which provides about 15 percent of U.S. oil imports, is the largest supplier that hasn't raised its price. A Gulf Oil Co. spokesman said his company, which is a major Nigerian customer, had recieved no indication whether that country might raise its price.
The Saudis started the latest round of increases ostensibly to try to re-establish price unity within the OPEC cartel. At that point, Saudi Arabia had the lowest official selling price in the world. $26 a barrel. Most other Persian Gulf producers, except for Iran were about $2 higher, with other oil exporters, charging prices between that and Algeria's $37.21.
But energy analysts questioned whether the Saudis would have acted before the June 9 meeting of OPEC ministers in Algiers, when prices will be discussed, if the objectives were to reduce the large spread among officials selling prices. A similiar maneuver last December, when the Saudi price jumped from $18 to $24 a barrel, backfired just as this one seems to have done if price unity were the goal, the analysts said.
A $2 increase in the price of a 42-gallong barrel of crude boosts a refiner's cost by slightly less than 5 cents a gallon.
After the Saudis acted last week, Standard Oil Co. of California, which has had the lowest prices of any of the international oil companies, announced a four-cent-a-gallon increase in gasoline prices and a six-cent jump in heating oil and diesel prices.
Company officials attributed about half of the gasoline price increase to the higher cost of Saudi crude. The other half was due to the rising cost of domestic crude as more of it is freed from price controls each month.
The heating oil and diesel price increases were larger because those prices hadn't changed for several months, a Chevron official said. Chevron gasoline prices had gone up more recently, in February, he added.
Meanwhile, lower U.S. demand for oil products and higher production has trimmed the level of oil imports. During April, net imports were only 6.2 million barrels a day, down from 7.3 million last year.